The top 10 business entity errors
That delay return and payment processing
- Error: Incorrect or incomplete information provided for Questions A through AA on forms 100, 100W, and 565; Questions A through R on forms 100S; or Questions A through Y on Form 568.
Solution:Answer all questions completely and accurately.
- Error: Not clearly identifying amended returns.
Solution: Use the Form 100X when amending Forms 100, 100W, and 100S. Check the Amended Return box when amending Forms 565 and 568.
- Error: Limited Liability Companies (LLCs) filing the incorrect form.
Solution: LLCs classified as a partnership must file either Form 568 or Form 565. Partnership LLCs that are organized in California, registered with California's Secretary of State (SOS) or doing business in California must file Form 568. Partnership LLCs that are not organized in California, not registered with the California SOS and not doing business in California, but that receive California source income, must file Form 565. LLCs classified as a corporation must file Form 100 or 100S, not Form 568 or Form 565.
- Error: Using an incorrect tax year form for the accounting period indicated on the return.
Solution: Use the correct tax year form. For fiscal filers, use the form for the year the fiscal year began. For example, if the fiscal year began in 2006, use the 2006 form.
- Error: Multiple tax returns filed for the same accounting period.
Solution: Only file one original return for each accounting period. Allow three to six months for original returns to process. If you need to file an amended return, use Form 100X to amend Forms 100, 100W, and 100S, or check the Amended Return box for Forms 565 and 568.
- Error: Overlapping return accounting periods.
Solution: An entity should never have accounting periods that overlap. Consistently use the correct accounting period. If the entity changes accounting periods, the change must be approved, either directly or implied, by FTB.
- Error: Omitting or using an incorrect entity identification number.
Solution: Enter the correct entity identification number(s) on the return. Corporations should enter both the seven-digit California Corporation number, and the nine-digit Federal Employer Identification Number (FEIN). Partnerships should enter the FEIN. LLCs should enter both the 10- or 12-digit Secretary of State (SOS) File Number (or the nine-digit number assigned by FTB), and the FEIN.
- Error: Using an incomplete entity name.
Solution: The entity should use the exact legal name as incorporated, qualified, or registered with the SOS.
- Error: Claiming an incorrect amount of payments.
Solution: Keep accurate records of the payments remitted to FTB for each accounting period. Make sure all payments remitted include the correct entity identification number, the exact legal name of the entity, and the accounting period for which the payment is intended.
- Error: Remitting one lump sum payment for multiple entities or multiple payments in the same package/envelope.
Solution: Payments for multiple entities should never be included together in one lump sum payment, nor should separate payments be mailed in the same package or envelope. Mail payments for separate entities and accounting periods individually. Make sure all payments remitted include the correct entity identification number, the exact legal name of the entity, and the accounting period for which the payment is intended.
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